The second quarter of 2024 was a good one for Hyatt Hotels Corp., which reported comparable systemwide revenue per available room growth of 4.7 percent from the same quarter in 2023. Net income for the quarter was $359 million and adjusted net income was $158 million.
“As anticipated, group and business transient were our strongest customer segments in the quarter,” President and CEO Mark Hoplamazian said in an earnings call with investors, noting that for the first half of the year, leisure transient revenue was up 2 percent compared to the same quarter in 2023.
The company also officially added 700 boutique and luxury hotels and villas from the Mr & Mrs Smith collection during the quarter. A full 80 percent of those properties have been booked by members of the company’s World of Hyatt loyalty program, and two thirds of those bookings were paid reservations rather than redemption of loyalty points. “By the end of this year, we expect to have over 1,000 Mr And Mrs Smith properties available through World of Hyatt,” Hoplamazian said.
Hoplamazian did not directly mention last month’s rumors of Hyatt acquiring the Standard Hotels brand, but did say the company has been “and will continue to be very intentional with our organic and inorganic growth.”
During the quarter, the company revised its definition of adjusted earnings before interest, taxes, depreciation and amortization to exclude transaction and integration costs and recast prior period results to provide comparability. With that in mind, adjusted EBITDA for Q2 was $307 million.
Openings and Development
In the second quarter, 18 new hotels (or 3,251 rooms) joined Hyatt's portfolio for net rooms growth of 4.6 percent. Notable openings included Park Hyatt Changsha, China; Maison Métier in New Orleans; Legend Paracas Resort, the first Destination by Hyatt property in Peru; and the Hyatt Vivid Grand Island in Cancun, Mexico—the first open Hyatt Vivid Hotels & Resorts property. Additionally, the first Caption by Hyatt properties outside the United States opened in the quarter: Caption by Hyatt Namba Osaka, Japan; and Caption by Hyatt Zhongshan Park Shanghai. “What we are seeing is not just openings,” Hoplamazian said of growth in the quarter. “We're seeing great openings. We're seeing openings of high quality.”
As of June 30, the company had a pipeline of executed management or franchise contracts for approximately 670 hotels (approximately 130,000 rooms). “This represents a 9 percent increase year over year and our pipeline accounts for 40 percent of our existing room base”
Transactions and Capital Strategy
In addition to the sales of Park Hyatt Zurich on April 4, Hyatt Regency San Antonio Riverwalk on April 23, and Hyatt Regency Green Bay, Wis., on May 1, the company:
- Acquired the me and all hotels brand from Lindner Hotels AG on June 28. There are six me and all hotels with over 1,000 rooms currently open in Germany which joined Hyatt through the strategic collaboration with Lindner Hotels AG in 2022. The me and all hotels brand has a “healthy pipeline” with an additional 1,000 rooms in the executed pipeline and more development deals in various stages of negotiation.
- Expects to close on the sale of an asset that is under a purchase and sale agreement by the end of August, which would complete the company's $2 billion asset sell-down commitment.
“With these sales, we have realized $1.5 billion in gross proceeds [at a 13.3x multiple] from asset sales towards our $2 billion commitment,” Hoplamazian said, referring to the company's August 2021 plan to generate $2 billion in proceeds from asset dispositions by the end of 2024. Hyatt expects to close the sale of an as-yet undisclosed property that is currently under a purchase and sale agreement by the end of August. This transaction will put the company above its $2 billion disposition commitment.
Forecasts and Next Steps
Hyatt’s full-year comparable system-wide hotels RevPAR is projected to increase 3 percent to 4 percent on a constant currency basis compared to full-year 2023. Full-year net income is projected between $1.05 billion and $1.11 billion. Full year adjusted EBITDA is projected between $1.13 billion and $1.17 billion
“We expect net rooms growth between 5.5 and 6 percent, driven by organic growth, conversions and potential portfolio transactions that may close by year-end,” CFO Joan Bottarini said. Hoplamazian noted that about a third of Hyatt’s Q2 room openings were conversions. “We … believe that we will end the year at closer to 50 percent of the total net rooms growth being conversions,” he said.
While not explicitly referring to the rumored Standard deal, Hoplamazian said the company sees “real opportunities” for portfolio deals. “Sometimes that means doing a strategic partnership portfolio deal, like the Lindner hotels deal, where we sign franchise agreements for all of those hotels. Sometimes they come in the form of an acquisition of a brand or a management platform, like we did with Dream Hotels.”
The company, he continued, has “several” such deals “in the hopper at this point” that “we feel really good about.” When partnering with or acquiring companies, he added, Hyatt’s leadership seeks out businesses that have an established customer base, “already-identified embedded growth and that … are asset-light.”